As parents, we hope we’re doing a good job raising our children — teaching them right from wrong, instilling the desire to learn and demonstrating how to manage money responsibly.
But what if they see us preaching one behavior while practicing another? What’s to stop them from following in our sometimes misguided footsteps?
As Father’s Day approaches, let me share a few things dads can do to teach their kids sound financial habits that will last them a lifetime:
• Use allowances to teach your kids how to handle money wisely, not as a tool to reinforce good behavior. Track their discretionary (toys, candy) and non-discretionary (school supplies, clothes) expenses. Depending on their ages and maturity, decide which expenses they should be responsible for managing, and dedicate a reasonable amount for each category in their allowances.
• Use allowances to teach important life lessons. For example, build in dedicated percentages they must set aside for savings, charity and investments — then involve them in choosing how the money is spent.
• When you use an ATM, explain that it’s not free money but rather has been earned and saved by you.
• To encourage saving during these times of low interest rates, offer to match their savings at 50 percent.
• Teach by example. If money is tight and you have to deny your kids non-necessary items, give up something of your own that they know you’ll miss.
• Open a 529 Qualified State Tuition Plan or a Coverdell Education Savings Account to start saving for your children’s education — and let them know about it well before you start discussing college choices.
Father’s Day is when children traditionally express love for their dads. Show how much you care in return by starting them out with a healthy, realistic attitude toward personal finances.
Alderman directs Visa’s financial education programs.